It is pretty clear that legal analytics are here to stay in law department management, and the ways analytics can be used are likely to increase.

According to the results of a survey recently released by Huron Legal, 68% of responding legal technology professionals believe their organizations’ investment in legal analytics will increase over the next two years. At LegalTech® New York last month, an educational session sponsored by Huron Legal also emphasized the likely growth of analytics.

The panel included present and former in-house experts, who were asked their views regarding a number of potential uses. The audience was asked to weigh in as well. While there was universal agreement on the panel and in the audience that analytics can be useful for managing legal costs, organizations are only beginning to use them. Forty-five percent of survey respondents cited cost management as the greatest benefit of legal analytics, but only a third (33%) of the survey respondents presently use analytics for litigation management and nearly a quarter (24%) for law department management. Only 16% said they use analytics for rate and fee negotiation.

Several panelists felt that law firms are not yet able to manage costs well, and cited analytics as a tool through which law departments can both manage those costs and educate their outside counsel. Panelists agreed that managing costs requires collaboration between the law department and outside counsel, but most said that they are more willing to partner with firms who will be progressive in their cost management methods than with those who will not. One panelist suggested that the onus is on clients to drive what they want their law firms to do; it’s about managing expectations, sharing information with firms about what they are seeing in the market and asking the firms to adapt. Panelists observed that many law firms are affirmatively requesting this information – asking their clients about the kind of metrics that are important to them, and being willing to respond.

While the traditional pushback from law firms regarding matter budgeting is that every matter is unique, the panelists were reluctant to buy that argument, indicating that while there may be nuances to individual matters, there are clear patterns and trends that analytics can identify.

There was mixed agreement that analytics can help predict case outcomes. The technology may be there, but one panelist suggested that the level and quality of data required for sophisticated decisions can be very difficult. There is also an element of “art” involved. Nevertheless, panelists were optimistic about the prospects for that use of analytics. As one put it, “Models don’t help you predict the future, but help you imagine it.”

The legal market is arguably behind others in the use of analytics. Nearly two-thirds (64%) of respondents to the Huron Legal survey said that the legal industry is behind other industries. Panelists suggested this may because there’s a “lot of grey” in the practice of law, and also because analytics may be perceived as threatening profitability.

Most of the panelists and audience members would not go so far as to say that analytics threaten lawyers and the practice of law or that they would not hire a lawyer who didn’t understand or use analytics; all expressed strong respect for the nuances and judgment required, especially in sophisticated matters. Nevertheless, there was a clear consensus that analytics will change the way lawyers practice.

For now, analytics best use is in pricing and benchmarking data regarding the most economic delivery of legal services. Where analytics can go next, according to the LegalTech® panelists, is the ability to categorize cases, predict outcomes to some degree, and generally provide information about the return on investment of representation. Where do you think legal analytics will be used next?